17 June 2007 - 01:36
Indian Vegetable Traders in Riots against Supermarket Chains
The Indian food retail market is big business ($200 billion) but traders are not happy about the rapid roll-out of supermarkets.
In May an angry crowd of vegetable sellers ran riot through a newly-opened Reliance Fresh supermarket in India's Jharkand state. When Reliance opens its stores in Mumbai people are expecting the same thing to happen, except on a bigger scale.
A week after the violence in Jharkand, a Reliance store was attacked in Madhya Pradesh, and, faced with mounting protests, the chain has been forced to postpone opening its store in Bhopal.
Politicians are also getting involved, the Communist Party of India, a powerful force in India, has called for a licence system with strict quotas for local supermarket chains, and a ban on the involvement of foreign chains such Wal-Mart, Tesco, Carrefour etc...
Wal-Mart is the biggest of all the chains and it intends opening is first hypermarket in India early next year and has plans for a chain covering 10 million sq feet by 2015. Dharmendra Kumar, of No FDI in Retail, which is opposed to international companies in the Indian retail sector says : "Wal-Mart is …. enemy number one. They have a huge capacity to source goods from outside, which will not only hurt the small retailer but small manufacturers."
In the UK retail chains are well-known for paying farmers very low prices while at the same time raking in vast profits, so Indian retailers and wholesalers would be well-advised to resist the spread of supermarkets in their country.
Reliance Industries is India's largest private company and its billionaire owner Mukesh Ambani plans to open 4,000 to 5,000 shops in the next 3 to 4 years, a staggering number, which in the US or Europe has taken 40 years to achieve.
Reliance plans to replace India's traditional food-supply chain with its own ‘rationalised’ system, which will no doubt mean low wages, low prices to farmers and even more billions for those at the top.
According to Bhupendra Bhosle, a trade union member, "If Ambani starts collecting vegetables directly from the farmers, the middle men are going to face a lot of unemployment problems."
Profits can be big for vegetable traders, they don’t like to reveal their margins but one trader has said that he buys green chillis for around 9 rupees per kg, which he then sells on for 120-130 rupees a kilo to smaller wholesalers (sounds like daylight robbery to me ! Ed.).
With such high profit margins it is not surprising that Wal-Mart and Reliance have decided they want a piece of the action, but they are unlikely to find the going easy.
Full article here : Independent
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